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If you are looking to invest in the international property market, you will be looking for the right mortgage. There are many options available to the overseas investor, and probably the easiest, quickest and safest way to obtain the right mortgage is to go via an overseas mortgage broker.
Why Use a Broker?
Brokers differ from banks and mortgage officers, because they can access a number of companies to give the borrower more choice when seeking the right mortgage. They will also be fully knowledgeable on the local market - so niggling issues such as language barriers and local regulations need not be a concern. The advice a mortgage broker provides will be independent as they are not tied to a specific mortgage company.
What Shall I Look For?
There are so many overseas mortgage providers available - see our comparisons page for a selection - that it can be hard to know what makes a good provider stand out.
Basics to look out for include:
- What are the mortgage interest rates offered?
- Fees
- Are there any and how high are they?
- How many countries do they service and which languages can the team speak?
- Who regulates them
- Are they an established company?
They key is not to take the first offer that comes your way. Shop around and compare the offers, as providers may give you differing deals. Some will be able to offer a good deal on fees, but be limited in their serviced countries.
Sterling or Foreign Currency Loan?
The better option here depends, as ever, on the individual circumstance. With an overseas mortgage broker, you will have the mortgage arranged for you - usually with a local bank. All the paperwork and legwork will be sorted by the broker.
A foreign currency mortgage should, in the long run, work out cheaper. Make sure to look out for the local repayment period, and what the deposit works out as - these may be quite different than those in the UK. If you are planning on renting out your overseas property, you will be benefiting with a foreign currency mortgage, as no sterling input will be required - the property will be self-financing in local currency.
What is the Minimum Loan?
Depending on your circumstances, an overseas mortgage broker will be able to give you a loan amount. They will give you a quote and advise what are the most suitable products for you. Minimum loans will differ but many are around €100000.
What are the Fees?
Fees vary according to providers - some charge an application fee of around £200, and some do not. There are some mortgage providers who charge a completion fee of around 1%, and again there are some that do not - this is certainly a key area to research when comparing overseas mortgage brokers.
Which Countries are Serviced?
This depends on the provider. The most common markets are in Spain, France, Italy and Portugal but countries further afield such as Caribbean islands, the US and Canada are also widely serviced. Some offer extra countries on a case by case basis.
Are they Regulated?
Most mortgage brokers are regulated by the Financial Services Authority, and since 2004 the FSA has taken over the regulation of mortgage brokers. However, overseas mortgage brokers are not required to be regulated by the FSA - therefore, make sure they are regulated by an authorised firm. Check your provider's Terms and Conditions, or feel free to ask them if you are unsure.
What Are the Risks?
Before dedicating to an overseas mortgage, it is important to make yourself fully aware of the risks involved.
Familiarise yourself with local timeframe
Remember that each country has its own rules and regulations, and transaction time period. Many people forget that it can take longer for transactions in the overseas markets in comparison to the UK. You may be accustomed to making an online transaction or application in minutes, but in some countries this can take weeks. Do not delay in organising finances or the purchase could be at risk.
Seek independent financial advice
Some UK buyers pay for foreign properties in cash and remortgage their UK property. While this may seem an easier option, but this brings the real and grave risk of losing your UK property if you fail to meet the new and higher repayments.
Exposure to fluctuation in money market
As you probably know, currencies are constantly changing in value. So when you take a foreign mortgage, check to see if you will be winning in the exchange rate. You have the option, therefore, to use a foreign currency broker, who will be able to book currency ahead using a forward contract. That means you can guarantee the lowest rate for a time period.
Overseas Mortgages at Which Way To Pay
At Which Way To Pay, you can access a range of overseas mortgage providers in one place. All of these are compared and reviewed, with the basics, including fees and services listed out. This means you can easily compare providers and effectively shop around before committing to a service.
Whether you're after a private or commercial property abroad, you will be able to to choose a provider to suit you
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